Hyundai: Excavator King

HHI has built a strong share in the excavator market in the GCC

INTERVIEWS, PMV, HHI, Hyundai, Hyundai engineering and construction, Hyundai Heavy Industries

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Hyundai Heavy Industries (HHI) has built a strong share in the excavator market in the GCC. PMV Middle East editor Stian Overdahl speaks with S. B. Yun, the Middle East regional manager for HHI.

In 2011, Hyundai Heavy Industries Co. had total revenues of $48.7 billion. Of this, construction equipment made up only a fraction, with ship building and offshore & engineering the two largest divisions in the company. However construction equipment is still a major earner.

In 2010 the sales of its machinery division grew 91.1%, to nearly $2 billion. In the GCC the brand has made a big impact, especially with its 9S series of tracked excavators, ranging from the 5.6 tonne mini excavator, through to the 51 tonne 5200LC-9S.

Earlier this year in Korea, Hyundai HI released a 118 tonne excavator for mining applications. Wheeled excavators, backhoe loaders and wheel loaders round out the construction range, as well as forklifts.

In the GCC, Hyundai Heavy Industries has some impressive credentials. Anecdotally, visitors to a major project in Saudi Arabia or Qatar or Bahrain will in all likelihood be able to spot Hyundai excavators.

It’s an experience backed up by figures: its market share in the GCC crawler excavator market stood at 28% in 2011, and was over 50% in the – much smaller – wheeled excavator segment.

In Saudi Arabia and in Bahrain HHI was number one 2011 for tracked excavators; in Saudi, one in three of all excavators sold last year was Hyundai brand, with extensive involvement in projects in the western region, including Jeddah and Makkah.

This year the company is targeting more than 35% in the crawler excavator market to keep its position in the region, says S. B. Yun, the Middle East Regional Manager, based in Jebel Ali, Dubai.

“Our excavators are well known in foundation work, water and pipeline project, housing project and road construction sectors in the region.”

It’s fast progress for a company that started production of construction equipment in just 1985. Its first dealers were appointed in Saudi Arabia and Bahrain in 1990, and the Middle East sales and service network was quickly completed.

“Since then, we developed the local tropical specifications suitable for the Middle East market and have been providing the right quality products in the region,” explains Yun.

Quality and price are the two main attractions of the Hyundai product, says Yun. Quality-wise, the brand is on par with long-established brands such as Cat and Komatsu, he believes.

Price-wise it is competitive. For customers, fast delivery times from the factory in South Korea is also a factor, says Yun, who seems surprised that some competitors are unable to supply the market in a timely fashion.

Last October HHI opened a Parts Distribution Centre in Jebel Ali. The major spare parts warehouse in Dubai means that parts needed for repairs can reach anywhere in the Middle East or Africa within 48 hours.

“We can guarantee quick and accurate deliveries in the Middle East and Africa,” says Yun, and a strong service network is part of the company’s plan to expand in the region.

Recently HHI outlined aggressive plans for growth across the next few years, something which the Middle East factors into.

“Based on the excavator and wheel loader sales, HHI ranked 5th in the world in 2011,” says Yun, “But our target is to be the global top 3 construction equipment manufacturer by 2016.

“For this vision, we recently made a joint venture with Cummins. The joint venture operation will be located in Korea, with manufacturing to commence in 2014. This will improve our sales and the performance of our equipment.”

The 50/50 JV will produce mid-size engines, between 5.9 to 8.9 litre displacement, and will be used to power a range of machines including wheel loaders and the popular 9S Series excavators sold here. At full capacity, the factory will produce 50,000 engines per year, and builds on HHI’s long association with Cummins.

“On top of that, we will continue to focus on expanding our competitiveness through ongoing investments such as the manufacturing facility in Brazil, Latin America’s market which was established in 2012 with strong long-term growth prospects.

“We will push forward with evaluation of potential investments in many regions,” says Yun. “Since the Middle East is one of HHI’s major markets, we will enhance customer satisfaction by providing quality products and upgrading our service.”

Earlier this year the company released a rejuvenated 9 Series. With up to two years of testing at the factory and in the field, including Saudi Arabia, the tracked excavators are prepared for the market says Yun.

“Our newly-launched 9-series excavators have distinctive new styling including significant specification and technical improvements. The complete range includes the new hydraulic system, Hi-mate system (Remote Management System) that uses GPS-satellite technology.

“Backed up by highly advanced factory automation, a zero-tolerance quality control inspection system and innovative engineering, HHI is widely recognized as a construction equipment manufacturer for its use of advanced ergonomic engineering and technology.”

For manufacturing purposes, the Middle East version of the machine is built for Africa, South-East Asia and the Middle East, with an emphasis on building the machine to cope with high ambient operating temperatures, and humidity and dust.

Hyundai Heavy Industries is part of the larger Hyundai Heavy Industries Group, part of the second-largest chaebol in Korea. Its majority owner is the businessman and civic figure Chung Mong-joon, the sixth son of the founder of the Hyundai conglomerate.

A major figure in construction in the Middle East, Hyundai Engineering & Construction Co. (HDEC), who has worked on construction, oil & gas, power and port project across the region. Owned by Hyundai Group until 1999, more recently it was bought by Hyundai Motor Company, in 2011.

While the companies are not owned by the same parent company, there is a relationship nevertheless says Yun.

“Although HHI does not have the direct business relationship with HDEC, HHI is teamed up with HDEC for many projects in the power plant and construction equipment sectors, which makes synergy effect to boost our sales by using the same brand, Hyundai.”

The many companies of Hyundai
As a brand, Hyundai is perhaps best known for passenger vehicles, unleashed onto the world in the 1980s. The company was founded in 1947, and was extensively involved in the reconstruction effects after the Second World War, and after the Korean War.

A conglomerate, known in Korea as a chaebol (other chaebol include LG, Samsung and LK), the company had subsidiaries producing everything from elevators, container ships and semi-conductors. Hyundai Motor Company was founded in 1967.

However during the Asian Financial Crisis, Hyundai was forced to unwind a significant number of its companies, including Hyundai Heavy Industries and Hyundai Motor Group.

Despite this, many of the former major groups of Hyundai are headed up by sons of the Hyundai founder, or their heirs, and while there are no formal links between the various Hyundai Group–companies, they remain a significant economic power in Korea.

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